Exhibit 10.8
DREAMWORKS ANIMATION SKG,
INC.
1000 FLOWER STREET
GLENDALE, CA 91201
October 23, 2008
Ann Daly
c/o Munger, Tolles & Olsen
LLP
355 South Grand Avenue
35
th
Floor
Los Angeles, CA 90071
Attn: Rob Knauss
Dear Ann:
Reference is made to that certain
executed Employment Agreement, dated as of October 25, 2007,
between DreamWorks Animation SKG, Inc., a Delaware corporation
(“Studio”), and you, whereby Studio agreed to employ
you and you agreed to accept such employment until
December 31, 2009, upon the terms and conditions set forth
therein (such agreement, the “Prior Agreement”). Studio
now wishes to amend and restate the Prior Agreement in order to,
among other things, continue your employment beyond
December 31, 2009, and you wish to remain employed by Studio
beyond such date, in each case, pursuant to the terms and
conditions set forth below. Therefore , the parties now
hereby agree to amend and restate the Prior Agreement in its
entirety as set forth in this agreement (this
“Agreement”), effective as of the date shown
above:
1. Term . The term of
your employment commenced on October 27, 2004, which was the
closing date of Studio’s initial public offering (the
“Commencement Date”), and shall continue until
December 31, 2013. This period shall hereinafter be referred
to as the “Employment Term”.
2.
Duties/Responsibilities/Reporting .
a. General . Your title shall
be “Chief Operating Officer” of Studio. You shall have
such duties and responsibilities as are consistent with the
traditional position of Chief Operating Officer of publicly traded
major entertainment and media corporations.
b. Services . During the
Employment Term, you shall render your exclusive full time business
services to Studio and/or its divisions, subsidiaries or affiliates
in accordance with the reasonable directions and instructions of
the President of Studio, all as hereinafter set forth.
c. Reporting . Studio hereby
employs and retains you to render your exclusive full time business
services to Studio and/or its divisions, subsidiaries or affiliates
in accordance with the reasonable directions and instructions of
the President of Studio, all as hereinafter set forth. You shall
report to the President of Studio (currently Lew Coleman
(“Coleman”)); provided that if Coleman is not actively
involved in the business of Studio or is otherwise incapable of
involvement in the day-to-day business of
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Studio, including by reason of death or
disability, then you shall report to the Chief Executive
Officer of Studio. In addition, if any senior executive of Studio
other than the President reports to the Chief Executive Officer of
Studio, then you shall be entitled to report to the Chief Executive
Officer of Studio.
3. Exclusivity . You
shall not during the Employment Term perform services for any
person, firm or corporation (hereinafter referred to collectively
as a “person”) without the prior written consent of
Studio and will not engage in any activity which would interfere
with the performance of your services hereunder, or become
financially interested in any other person engaged in the
production, distribution or exhibition of motion pictures or
television programs (including, without limitation, motion pictures
produced for, distributed to or exhibited on free, cable, pay,
satellite and/or subscription television, music and/or
interactive), anywhere in the world. Nothing contained herein shall
prevent you from owning publicly traded minority stock interests
not to exceed five percent (5%), limited partnership interests or
other passive investment interests in businesses performing any of
the aforesaid activities.
4. Compensation
.
a. Base Salary . For all
services rendered under this Agreement, Studio will pay you a
yearly base salary at a rate of One Million Twelve-Thousand Dollars
($1,012,000) for each full year of the Employment Term, payable in
accordance with Studio’s applicable payroll practices
(“Base Salary”).
b. Equity-Based Compensation
.
(i) Immediately prior to the
Commencement Date, you received a grant of fully vested DreamWorks
LLC Phantom E Interests that, upon the Commencement Date, were
converted into fully vested shares of Studio Class A Common
Stock, par value $0.01 per share (“Shares”), that had
an aggregate value as of October 27, 2004 (which was the IPO
pricing date) of $5,700,000.
(ii) On October 27, 2004, you
received, pursuant to the 2004 Omnibus Incentive Compensation Plan,
stock options with respect to Studio’s Class A common
stock (“Options”) having a grant-date value of
$1,990,000 and restricted shares of Studio’s Class A
common stock (“Restricted Stock”) having a grant-date
value of $5,450,000 (the “Initial Grants”).
(iii) Concurrently with the
execution of this Agreement, you shall receive an award of
performance-based restricted stock units having a grant-date value
targeted at $9,000,000. The vesting of such award shall be subject
to conditions (including achievement of performance goals) as
specified in the agreement evidencing the grant of such award,
which agreement shall be executed concurrently with this
Agreement.
(iv) While you remain employed
hereunder, commencing in 2011, in lieu of receiving a larger base
salary than the amount set forth in Paragraph 4.a. of this
Agreement, you will be entitled to receive annual equity awards of
Options and
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Restricted Stock (or such other form of
equity-based compensation as the Compensation Committee of the
Board of Directors of Studio (the “Compensation
Committee”) may determine) having an aggregate grant-date
value of $500,000, provided that you shall not be entitled to
receive more than two (2) such awards during the period
beginning on the date hereof and ending on December 31, 2013
(the “Extended Term”). In the event that such awards
consist of Options and Restricted Stock, they shall be divided, as
determined by the Compensation Committee, between Options and
Restricted Stock.
(v) You will also be eligible, while
you remain employed hereunder, subject to annual approval by the
Compensation Committee, to receive annual awards of Options and
Restricted Stock (or such other form of equity-based compensation
as the Compensation Committee may determine). It is Studio’s
present expectation that such annual awards will have an aggregate
grant-date value targeted at $750,000. In the event that such
awards consist of Options and Restricted Stock, they shall be
divided, as determined by the Compensation Committee, between
Options and Restricted Stock. These annual awards shall be in lieu
of annual cash bonuses in the event the Compensation Committee does
not pay cash bonuses to Studio’s most senior executives;
provided that if the Compensation Committee does elect to pay such
cash bonuses in addition to such annual awards, such awards shall
also be in addition to any cash bonuses granted by the Compensation
Committee.
(vi) In addition, you will be
eligible, while you remain employed hereunder, commencing in 2011,
subject to annual approval by the Compensation Committee, to
receive annual equity incentive awards of Options and Restricted
Stock (or such other form of equity-based compensation as the
Compensation Committee may determine), provided that you shall not
be entitled to receive more than two (2) such awards during
the Extended Term. It is Studio’s present expectation that
such annual awards will have an annual aggregate grant-date value
targeted at $2,500,000. In the event that such awards consist of
Options and Restricted Stock, they shall be divided, as determined
by the Compensation Committee, between Options and Restricted
Stock.
(vii) All Options and Restricted
Stock (and any other equity-based awards) referred to in this
Paragraph 4.b will (x) be valued using a method or methods
(including where appropriate a Black-Scholes or other fair-value
method) as determined by the Compensation Committee from time to
time (and, in the case of the Initial Grants, taking into account
the IPO price to the public without regard to the underwriters
discount), (y) become fully vested, exercisable (if
applicable) and nonforfeitable within a period not to exceed five
(5) years from the date of the Initial Grant or four
(4) years from the date of any other grant, in a manner
determined by the Compensation Committee, and will be contingent on
both the continuing performance of services to Studio (subject to
Paragraphs 4.b(viii), 9, 10, 11, 12, 13 and 25) and the achievement
of performance goals as established by the Compensation Committee
from time to time (it being understood that the performance goals
and performance periods will be no more burdensome than the
performance goals and the performance periods for applicable
compensation awards made approximately contemporaneously to the
Chief Executive Officer, President, Chief Financial Officer and the
General Counsel of Studio), and (z) otherwise be subject to
such terms and conditions as may be set forth in the applicable
equity compensation plan
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of Studio (each such plan, a “Plan”)
or determined by the Compensation Committee from time to time.
Notwithstanding the foregoing, any performance-based Initial Grants
may, in the discretion of the Compensation Committee, have a
vesting schedule that ends in the first quarter of 2010.
(viii) Upon the expiration of the
Employment Term (i.e., December 31, 2013) but only if your
employment hereunder has not been terminated earlier, (x) you
will be entitled to all equity-based compensation vested as of such
date, and (y) provided that you retire from Studio, your
equity-based compensation that has not yet vested as of
December 31, 2013 will become vested as provided in this
Paragraph 4.b(viii). Accordingly, in the event that you retire from
Studio, (A) in the case of equity-based compensation awards
that are subject to time-based vesting criteria, the full amount of
such awards will vest on December 31, 2013, and (B) in
the case of equity-based compensation awards that are subject to
performance-based vesting criteria, following December 31,
2013, such awards will continue to remain subject to the
achievement of performance goals, as provided pursuant to the Plan
and the agreements evidencing such awards and to such other terms
and conditions as may be determined by the Compensation Committee
at the time of the grant. Notwithstanding clause (B) of the
immediately preceding sentence, in the event that a change of
control (as defined in Paragraph 25) occurs prior to the end of the
applicable performance period, unless provision is made in
connection with such change of control for assumption of such
awards or substitution for such awards in the manner described in
Paragraph 25.a, such awards shall be treated in accordance with the
proviso of Paragraph 25.a. Subject to the foregoing, all Options,
SARs and any similar equity-based awards will remain exercisable
for the balance of the term of the grant. In the case of restricted
stock units that are subject to time-based vesting criteria,
provided that you retire from Studio, such awards will be settled
within thirty (30) days following December 31, 2013. In
the case of restricted stock units that are subject to
performance-based vesting criteria, except as otherwise provided in
Paragraph 25, such awards will be settled on the seventieth
(70th) day after the date that such awards become vested. For
purposes of the immediately preceding sentence, an award will be
deemed to have vested when it is no longer subject to a substantial
risk of forfeiture (within the meaning of Treasury Regulation
Section 1.409A-1(d)). For purposes of this Agreement,
“retirement” or “retire” shall mean that
you have ceased to be an employee of Studio as of any date during
the 30-day period commencing on the expiration of the Employment
Term and, as of such date, (A) you have attained the age of 55
and (B) the sum of your age and years of service with Studio
is at least 70. For purposes of the foregoing sentence, your
employment with Studio shall be deemed to have commenced on
July 7, 1997. In the event that you do not retire pursuant to
this Paragraph 4.b(viii) and instead remain employed by Studio
following expiration of the Employment Term, your outstanding
equity-based compensation awards will continue to vest during your
continued employment in accordance with the terms of the applicable
awards and any new employment agreement between you and
Studio.
(ix) Studio agrees to use its best
efforts to either (A) in the case of equity-based compensation
awards granted to you that have a scheduled vesting date that is
after December 31, 2013, grant only those types of awards that
are not expected to be subject to immediate taxation upon the date
that you reach eligibility to retire pursuant to
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Paragraph 4.b(viii) ( e.g. , Options,
SARs or restricted stock units) or (B) in the event that
Studio has granted awards to you that are expected to be subject to
taxation in such a case, then if you do not retire pursuant to
Paragraph 4.b(viii) and instead remain employed pursuant to the
last sentence of Paragraph 4.b(viii), Studio will withhold from the
Shares subject to taxation a number of Shares sufficient to satisfy
applicable tax withholding obligations and shall permit you to sell
a number of additional Shares sufficient to pay any other marginal
income taxes with respect thereto, and all other Shares applicable
to such awards shall remain nontransferable and forfeitable by you
in accordance with Paragraph 4.b(viii).
(x) Notwithstanding any provision of
the foregoing Paragraph 4.b(viii) to the contrary, in the event
that Studio enters into a new employment agreement with Jeffrey
Katzenberg or extends his existing employment agreement (such new
or extended agreement, the “New Katzenberg Agreement”)
that provides for vesting of Mr. Katzenberg’s
equity-based compensation awards in connection with the expiration
of the New Katzenberg Agreement on terms that are more favorable
than those set forth in Paragraph 4.b(viii) above, then, except as
would result in the imposition of any taxes or other penalties
pursuant to Section 409A, you shall be entitled to treatment
of your equity-based compensation awards that are outstanding upon
expiration of the Employment Term on terms that are as favorable as
those applicable pursuant to the New Katzenberg
Agreement.
5. Benefits . In
addition to the foregoing, during the period of your employment
with Studio, you shall be entitled to participate in such other,
medical, dental and life insurance, 401(k), pension and other
benefit plans as Studio may have or establish from time to time for
its most senior executives. During the Employment Term, unless
earlier terminated as set forth below, you shall be entitled to
utilize Studio’s corporate jet for business-related air
travel (subject to Studio policy), you shall be entitled to
coverage in accordance with Studio’s standard leave of
absence policy and you shall be entitled to vacation days and/or
personal days to be taken subject to the demands of Studio (as
determined by Studio) and consistent with the amount of days taken
by other senior level executives; provided , however
, no vacation time will be accrued during the Employment Term. The
foregoing, however, shall not be construed to require Studio to
establish any such plans or to prevent the modification or
termination of such plans once established, and no such action or
failure thereof shall affect this Agreement.
6. Business Expenses .
Studio shall reimburse you for business expenses on a regular basis
in accordance with its policy regarding the reimbursement of such
expenses for executives of like stature to you (including travel,
at Studio’s request, which, in accordance with company
policy, is currently first class, a car and/or cellular phone and
including the reimbursement or direct payment of business phone
expenses on a regular basis in accordance with Studio’s
policy regarding the reimbursement or payment of such expenses for
executives of like stature to you). Expenses shall be eligible for
reimbursement hereunder to the extent that they are incurred by you
during the period of your employment with Studio pursuant to this
Agreement. All reimbursable expenses shall be reimbursed to you as
promptly as practicable and in any event not later than the last
day of the calendar year after the calendar year in which the
expenses are
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incurred, and the amount of expenses eligible
for reimbursement during any calendar year will not affect the
amount of expenses eligible for reimbursement in any other calendar
year.
7. Indemnification .
You shall be fully indemnified and held harmless by Studio to the
fullest extent permitted by law from any claim, liability, loss,
cost or expense of any nature (including attorney’s fees of
counsel selected by you, judgments, fines, any amounts paid or to
be paid in any settlement, and all costs of any nature) incurred by
you (all such indemnification to be on an “after-tax”
or “gross-up” basis) which arises, directly or
indirectly, in whole or in part out of any alleged or actual
conduct, action or inaction on your part in or in connection with
or related in any manner to your status as an employee, agent,
officer, corporate director, member, manager, shareholder, partner
of, or your provision of services to, Studio or any of its
affiliated entities or any entities to which you are providing
services on behalf of Studio or which may be doing business with
Studio. To the maximum extent allowed by law, all amounts to be
indemnified hereunder including reasonable attorneys’ fees
shall be promptly advanced by Studio until such time, if ever, as
it is determined by final decision pursuant to Paragraph 24 below
that you are not entitled to indemnification hereunder (whereupon
you shall reimburse Studio for all sums theretofore advanced). Any
tax gross-up payments that you become entitled to receive pursuant
to this Paragraph 7 will be paid to you (or to the applicable
taxing authority on your behalf) as promptly as practicable and in
any event not later than the last day of the calendar year after
the calendar year in which you remit the related taxes.
8. Covenants
.
a. Non-Competition . You
acknowledge and agree that due to the unique and intellectual
nature of your services and due to your familiarity with the
confidential strategies, creative concepts, proprietary animation
techniques and technology, market studies, marketing and other
confidential information of Studio, including information that you
will develop for Studio, it will be impossible for you to perform
animation services for any other animation employer or animation
division of an employer or animation division of a production or
entertainment company for some time after the termination of your
services with Studio without necessarily using confidential
information and techniques of Studio; and you further agree that it
would be impossible for you to discharge your duty to use your best
efforts to assist such other entity without breaching your duties
of confidentiality to Studio, provided , however ,
that nothing herein shall prevent you from serving in an executive
position at an entertainment company that has an animation
division, provided that supervision of such division is not your
primary job responsibility. Accordingly, to the extent permitted by
California law, you agree that for one (1) year after your
services to Studio terminate for any reason (subject to Paragraphs
12 and 13 below), you shall not perform any services related to
animation for any other entity (including any entity owned or
controlled in whole or in part by you) or assist any other person
or entity to engage in such services. You agree that this
restriction shall not prevent you from obtaining employment,
including employment in the film or entertainment industries in
areas other than animation, and that this restriction is reasonable
and necessary to protect legitimate interests of Studio unless
otherwise provided by California law.
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b. Confidential Information .
You agree that you shall not, during the Employment Term or at any
time thereafter, use for your own purposes, or disclose to or for
any benefit of any third party, any trade secret or other
confidential information of Studio or any of its affiliates (except
as may required by law or in the performance of your duties
hereunder consistent with Studio’s policies) and that you
will comply with any confidentiality obligations of Studio known by
you to a third party, whether under agreement or otherwise.
Notwithstanding the foregoing, confidential information shall be
deemed not to include information which (i) is or becomes
generally available to the public other than as a result of a
disclosure by you or any other person who directly or indirectly
receives such information from you or at your direction or
(ii) is or becomes available to you on a non-confidential
basis from a source which you reasonably believe is entitled to
disclose it to you.
c. Studio Ownership . The
results and proceeds of your services hereunder, including, without
limitation, any works of authorship resulting from your services
during your employment and any works in progress, shall be
works-made-for-hire and Studio shall be deemed the sole owner
throughout the universe of any and all rights of whatsoever nature
therein, whether or not now or hereafter known, existing,
contemplated, recognized or developed, with the right to use the
same in perpetuity in any manner Studio determines in its sole
discretion without any further payment to you whatsoever. If, for
any reason, any of such results and proceeds shall not legally be a
work-for-hire and/or there are any rights which do not accrue to
Studio under the preceding sentence, then you hereby irrevocably
assign and agree to assign any and all of your right, title and
interest thereto, including, without limitation, any and all
copyrights, patents, trade secrets, trademarks and/or other rights
of whatsoever nature therein, whether or not now or hereafter
known, existing, contemplated, recognized or developed by Studio,
and Studio shall have the right to use the same in perpetuity
throughout the universe in any manner Studio may deem useful or
desirable to establish or document Studio’s exclusive
ownership of any and all rights in any such results and proceeds,
including, without limitation, the execution of appropriate
copyright and/or patent applications or assignments. To the extent
that you have any rights in the results and proceeds of your
services that cannot be assigned in the manner described above, you
unconditionally and irrevocably waive the enforcement of such
rights. This Paragraph 8.c is subject to, and shall not be
deemed to limit, restrict, or constitute any waiver by Studio of
any rights of ownership to which Studio may be entitled by
operation of law by virtue of Studio or any of its affiliates being
your employer.
d. Return of Property . All
documents, data, recordings, or other property, whether tangible or
intangible, including all information stored in electronic form,
obtained or prepared by or for you and utilized by you in the
course of your employment with Studio or any of its affiliates
shall remain the exclusive property of Studio. In the event of the
termination of your employment for any reason, and subject to any
other provisions hereof, Studio reserves the right, subject to
Paragraph 27.b, to the extent required by law, and in addition to
any other remedy Studio may have, to deduct from
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any monies otherwise payable to you the
following: (i) the full amount of any specifically determined
debt you owe to Studio or any of its affiliates at the time of or
subsequent to the termination of your employment with Studio, and
(ii) the value of Studio property which you retain in your
possession after the termination of your employment with Studio
following Studio’s written request for such item(s) return
and your failure to return such items within thirty (30) days
of receiving such notice. In the event that the law of any state or
other jurisdiction requires the consent of an employee for such
deductions, this Agreement shall serve as such consent.
e. Promise Not To Solicit .
You will not, during the period of the Employment Term or for the
period ending two (2) years after the earlier of expiration of
the Employment Term or your termination hereunder, induce or
attempt to induce any employees, exclusive consultants, exclusive
contractors or exclusive representatives of Studio (or those of any
of its affiliates) to stop working for, contracting with or
representing Studio or any of its affiliates or to work for,
contract with or represent any of Studio’s (or its
affiliates’) competitors.
9. Incapacity
.
a. In the event you are unable to
perform the services required of you hereunder as a result of a
physical or mental disability and such disability shall continue
for a period of ninety (90) or more consecutive days or an
aggregate of four (4) or more months during any twelve
(12) month period during the Employment Term, Studio shall
have the right, at its option and subject to applicable state and
federal law, to terminate your employment hereunder, and Studio
shall only be obligated to pay you (a) for a period commencing
on the termination of your employment by Studio and ending on the
earlier of the expiration of the Employment Term and the second
anniversary of the termination of your employment, payments at a
rate equal to 50% of your rate of Base Salary, and, except as
otherwise provided in this Paragraph 9.a, such payments will be
payable in accordance with Studio’s regular payroll practices
applicable to similarly situated active employees, and (b) any
additional compensation (including, without limitation, any grants
of equity-based compensation made to you on or prior to the date of
termination (it being understood you will not be entitled to
receive any grants of equity-based compensation thereafter) as
determined pursuant to Paragraph 9.b, and expense reimbursement for
expenses incurred prior to your termination) earned by you prior to
the termination of your employment. Notwithstanding the foregoing
sentence, you further will be entitled to continuation of medical,
dental, life insurance, financial counseling and other benefits
(the “Continued Benefits”) for a period of twelve
(12) months after termination of your employment pursuant to
this paragraph (but not to exceed the end of the then current
Employment Term). Except as specifically permitted by
Section 409A, the Continued Benefits provided to you during
any calendar year will not affect the Continued Benefits to be
provided to you in any other calendar year. Whenever compensation
is payable to you hereunder, during or with respect to a time when
you are partially or totally disabled and such disability (except
for the provisions hereof) would entitle you to disability income
or to salary continuation payments from Studio according to the
terms of any plan now or hereafter provided by Studio or according
to any policy of Studio in effect at the time of such disability,
the compensation payable to you
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hereunder shall be offset on a dollar-for-dollar
basis by any such disability income or salary continuation and
shall not be in addition thereto. If disability income is payable
directly to you by an insurance company under an insurance policy
paid for by Studio, the compensation payable to you hereunder shall
be reduced on a dollar-for-dollar basis by the amounts paid to you
by said insurance company and shall not be in addition
thereto.
b. Unless otherwise specified in the
Plan or in the agreement evidencing the grant, in each case as of
the date of the grant, after termination of employment pursuant to
Paragraph 9.a, your grants of equity-based compensation will
be determined as follows. For purposes of this Agreement (other
than Paragraph 4.b(viii)), an award will be deemed to have vested
when it is no longer subject to a substantial risk of forfeiture
(within the meaning of Treasury Regulation § 1.409A-1(d)).
With respect to grants having performance-based vesting criteria,
the amount of such award that is eligible to vest will be
determined after the end of the performance period specified in the
grant, or satisfaction of such other criteria pursuant to the Plan,
subject to the applicable performance or other criteria, as if you
had continued to remain employed with Studio throughout such
performance period. With respect to grants having time-based
vesting criteria, the full amount of such award will be eligible to
vest. Vesting will be determined promptly following termination of
employment. A ratable portion of the amount of each award that is
eligible to vest will become vested
